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 ITO vs. Vikram A. Pradhan (ITAT Mumbai)

Asst. CIT-12(1), Room No.117, Aayakar Bhavan, M. K. Marg, Mumbai-400 020 Vs. Business India 17/19, Wadia Building, Dalmal Street, Fort, Mumbai-400 001
July, 24th 2014

       ,     . .  . . ,                                             ,                    

                     ./I.T.A. No. 4659/Mum/2012
                    (   / Assessment Year: 2007-08)

Asst. CIT-12(1),                                    Business India
Room No.117, Aayakar Bhavan,               /        17/19, Wadia Building,
M. K. Marg, Mumbai-400 020                 Vs.      Dalmal Street, Fort,
                                                    Mumbai-400 001
     . /  . /PAN/GIR No. AADFB 7133 Q
         ( /Appellant)                        :            (      / Respondent)

         / Appellant by                       :     Shri Jeevanlal Lavidiya

           /Respondent by                     :     None

                          /                   :     17.07.2014
                    Date of Hearing
                     Date of Order            :     22.07.2014

                                     / O R D E R
Per Sanjay Arora, A. M.:

      This is an Appeal by the Revenue directed against the Order by the Commissioner
of Income Tax (Appeals)-21, Mumbai (`CIT(A)' for short) dated 04.04.2012, partly
allowing the assessee's appeal contesting its assessment u/s.143(3) of the Income Tax
Act, 1961 (`the Act' hereinafter) for the assessment year (A.Y.) 2007-08 vide order dated

2.    None appeared for and on behalf of the assessee-respondent, when the appeal was
called out for hearing. However, due notice through the listing per the notice board of the
                                                         ITA No. 4659/Mum/2012 (A.Y. 2007-08)
                                                                    Asst. CIT vs. Business India

Tribunal as well as by way of posting through net, i.e., subsequent to the initial posting
through personal service, having been made, we consider the assessee to have been put to
notice and, accordingly, proceeded to decide the appeal after hearing the party before us.

3.     The only issue arising in this appeal is with regard to the disallowance u/s.14A of
the Act, made in the sum of Rs.29,08,439/-, since restricted by the ld. CIT(A) to
Rs.6,99,000/-, so that the Revenue is in appeal. The disallowance by the Assessing
Officer (A.O.) stood made by applying Rule 8D; its components being as under:

       Out of interest expenses (indirect)        Rs.12,09,112/-
       Qua other indirect expenses                Rs.16,99,327/-

The assessee carried the matter in appeal, whereat it was, on the basis of the utilization of
the borrowed funds, as shown by the assessee with reference to its accounts, found that
no disallowance out of interest expenditure, incurred and claimed in the sum of Rs.46.84
lacs, was called for. Out of the indirect expenditure, it was observed by the ld. CIT(A)
that of the total expenditure claimed by the assessee per its profit and loss account at
Rs.2.28 crores, Rs.2.15 cr. was attributable to the assessee's business activity of printing,
pursued principally by it. The balance Rs.12,91,817/- was by way of common
expenditure, and which stood to be allocated between the assessee's investment activity
and business activity. Observing not much movement in the investment during the year
in-as-much as there appeared no change in the investment per the balance-sheet, it was
considered proper by him, taking the entirety of the facts and circumstances into
consideration, to restrict the disallowance to Rs.6.99 lacs. Aggrieved, the Revenue is in
appeal, raising the following grounds:
`1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in directing the AO to compute the reasonable disallowance u/s 14A following the Hon'ble Bombay High Court decision in the case of Godrej & Boyce. 3 ITA No. 4659/Mum/2012 (A.Y. 2007-08) Asst. CIT vs. Business India 2. While doing so the Ld. CIT(A) failed to appreciate the fact that the Revenue has proposed SLP against the decision of the Hon'ble High Court in the case of Godrej & Boyce.' 4. We have heard the party before us, and perused the material on record. The Revenue's case is wholly without basis in law; it challenging the impugned order on the basis that the decision by the hon'ble jurisdictional high court in the case of Godrej & Boyce Mfg. Co. Ltd. v. Dy. CIT [2010] 328 ITR 81 (Bom) has not been accepted by it, so that it has proposed a special leave petition (SLP) before the hon'ble apex court. Firstly, no evidence with respect to the moving the SLP has been adduced. Even so, the same would not detract from the binding nature of the judgment petitioned against; in fact, on all the authorities subordinate to the hon'ble court. It is this that led us to state of the Revenue's appeal as being wholly without merit. In fact, the only manner in which the impugned order could be validly challenged by it; rule 8D being not mandatory for the current year, was with reference to showing that the common expenses that stood to be bifurcated is in excess of Rs.12.92 lacs in-as-much as without doubt expenditure wholly relating to the business activity would not be subject to apportionment even under rule 8D, which is only a rule of apportionment. The second aspect on which an objection could possibly be made by the Revenue is to dispute the finding of the ld. CIT(A) with regard to the utilization of borrowed funds, which aspect stands explicitly dealt with by the ld. CIT(A). No material toward either has however been brought on record by the Revenue. 5. In the result, the Revenue's appeal is dismissed. Order pronounced in the open court on July 17, 2014 at the conclusion of the hearing. Sd/- Sd/- (Dr. S. T. M. Pavalan) (Sanjay Arora) / Judicial Member / Accountant Member Mumbai; Dated : 22.07.2014 4 ITA No. 4659/Mum/2012 (A.Y. 2007-08) Asst. CIT vs. Business India . ../Roshani, Sr. PS /Copy of the Order forwarded to : 1. / The Appellant 2. / The Respondent 3. () / The CIT(A) 4. / CIT - concerned 5. , , / DR, ITAT, Mumbai 6. / Guard File / BY ORDER, / (Dy./Asstt. Registrar) , / ITAT, Mumbai
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